Mumbai braces for mobile services battle

With at least seven more mobile service providers planning to launch operations in the Mumbai circle, following in the footsteps of GSM player Idea Cellular, the market is slated to become the country's most competitive and fierce telecom zone.

The slew of launches is likely to result in a churn - with subscribers discarding one operator for another - and, in turn, impact the already dwindling average revenue per user of the existing operators in the circle. The ARPU of existing operators is Rs 280 per month at present.

"Mumbai is a major market as it has the maximum number of subscribers and also has the highest ARPU," Datacom Solutions chief executive officer Ravi Sharma said.

The Mumbai operations could compensate for the low ARPUs and subscriber base in other circles for the new players, he added.

CDMA majors Reliance Communications and Tata Teleservices are looking at launching GSM services by year-end, with Mumbai topping the list of prorities. New licencees like Datacom Solutions, Unitech, Shyam Sistema, Swam Telecom and Loop Telecom are also waiting in the wings.

According to the Cellular Operators' Association of India, there are around 9.65 million subscribers in Mumbai whose number is growing by nearly 2.5 per cent a month. Analysts say that the city has "over 25 million potential mobile telecom subscribers". The ARPU in the circle ranges between Rs 400-600 per month as compared with the nation-wide ARPU of about Rs 280 per month.

Manesh Patel, partner (telecom advisory service) with Ernst & Young, said, "Competition in the Mumbai circle will be the highest as all entrants looking to gain the biggest slice of the pie. Mumbai has the highest visibility."

The market is lucrative due to the concentration of corporates, tech-savvy young people and the floating population.